The profit impacts of risk management tool adoption
Abstract
Purpose
The purpose of this paper is to measure the profit impacts of adopting input and output risk management tools at the farm level.
Design/methodology/approach
The analysis examines three years of farm‐level data from the Agricultural Resource Management Survey (ARMS) that include detailed questions on the adoption of risk management tools. Propensity score matching is used to control for the endogeneity of adoption decisions, and the profit impacts are estimated based on the matched dataset.
Findings
The adoption of input price risk management tools improves farm‐level profits by 13‐17 percent.
Originality/value
This is the first paper which examines the profit impacts of risk management tools while controlling for the endogeneity of adoption.
Keywords
Citation
Kuethe, T.H. and Morehart, M. (2012), "The profit impacts of risk management tool adoption", Agricultural Finance Review, Vol. 72 No. 1, pp. 104-116. https://doi.org/10.1108/00021461211222178
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited